The Rise and Robustness of Economic Freedom in China

Rodney Tyers

No 12-02, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: The performance of the Chinese economy since Deng Xiaoping’s and Jiang Zemin’s changes to the core philosophy of the Chinese Communist Party (CCP) is unprecedented for a country so large and could be seen as contrary to Popper’s central idea that liberal democracy is essential to peaceful transitions toward prosperity. It is argued in this chapter that this growth surge is due to the separation of economic from political freedoms and to increased liberalism toward the former. In modern China, however, these freedoms depend on political institutions that are fragile and so its growth cannot be yet regarded as robust. Indeed, interdependent as they are with the general level of development, Chinese economic freedoms are under threat from abroad and from the perceived necessity to depart from “export led” growth to a model driven by expanding consumption and home investment. Political and economic obstacles stand in the way of continued strong growth following this change of policy direction and a failure to deliver could cause a second shift in the core philosophy of the CCP and a future path on which both economic and political freedoms are lessened. While “soft resolutions” are available, they depend on the recognition abroad that global economic performance now depends importantly on continued economic growth in China.

Pages: 27 pages
Date: 2012
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